Social Inclusion Policy, the financial crisis and the EU2020

strategy

Erasmus Intensive Program – Sofia, 27 February 2012

Gert Verschraegen

2Current social situation in the EU is dramatic

• Unemployment in the EU has now reached a historically high level cancelling out all of the previous improvements, while long-term unemployment accounts for an ever higher share of total unemployment.

• Most groups are affected but especially hard hit are the young, the low-skilled and migrants.

• Poverty is on the rise in many Member States, especially the peripheral ones. Young adults, children and single parents are particularly at risk.

3Youth unemployment rate for EU Member States, November 2010, August 2011 and November 2011

4Peripheral and more vulnerable countries have

been hit harder by recent austerity measures

• Greece: Minimum wages and pensions have been slashed by 20% à 25%, medicines bills have been severely cut, different types of taxes on the rise with 15% till 40%

• Latvia: 15% wage cut across the public sector; pensions reduced considerably (e.g. by 10% for old-age pension benefits and 70% for working pensioners). Spending on education reduced by 25% (2009 compared to 2008).

• Ireland: public sector employee’s salaries were cut 20%. Taxes were increased on housing and water. This year the government is enacting additional cuts to health care and programs for children

5What’s left of ‘Social Europe’?• As social spending cuts amplify the effects of the crisis,

the four social groups traditionally more exposed to poverty – children, the elderly, women, and immigrants – are joined by a host of citizens not so easily labelled (mostly people with precarious jobs and lower earning capacities)

• a quarter of those Europeans who until now had a decent standard of living (middle classes) at risk of sliding into social exclusion.

• “New Poor”: people who marginally earn too much, i.e.  €620/month, to qualify for social welfare programs but do not earn enough to meet mortgage payments, health, and education costs

• How can European social policy help to respond to this crisis?

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Let’s take a step backwards

• ‘Social Europe’ : does it exist?• European social inclusion policy: instruments

and patterns• From the Lisbon Strategy to the EU2020

strategy• The current crisis and the social adequacy of

the EU 2020 strategy• Discussion: is there a future for Social Europe?

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Is there a ‘Social Europe’? (≠ European Social Model)

8 The European Ship, a picture puzzle

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Competing Visions on ‘Social Europe’ and How to Get There

1) Euro-corporatism, modeled after structure of national welfare states : gradual harmonization through legislation

2) Social and employment policies remain exclusivity of national welfare states: possibility of decentralised cooperation (new modes of governance)

3) Post-hierarchical integration / multi-level governance: Europeanization of national systems, through a variety of policy instruments

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European instruments for social policy

EU law

(a.o. gender equality,

health and safety at work,

anti-discrimination

directives)

New Governance

(a.o. EES; OMC Sociale

inclusion; OMC Pensions)

Structural Funds

(o.a. ESF, EFRD)

European Social

Dialogue

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1. EU hard law (‘Acquis Communautaire’)

A. SOCIAL ACQUIS

• Direct social legislation is scarce; for instance no legislation in the field of minimum income protection (unanimity requirement)

• Nothwithstanding absence of ‘pure’ social security legislation the ‘social acquis’ has expanded significantly (mainly in the field of labour law) and effects social security and social inclusion policies- Legislation on working time (hospitals, transports) - information and consultation directive- non-discrimination law (see next slide)

12Non-discrimination law• This implies, firstly, the development of a general European anti-

discrimination policy to provide better protection against discrimination (e.g., on the labour market, in housing, etc) on the basis of a person’s nationality, gender, religion, ethnic origin, etc. The best known example principle of equal pay for men and women performing the same work. Although such an anti-discrimination policy is not directly re-distributive, it does nonetheless exert important ‘social effects’; the fact is that it protects certain categories of the population (consider the ethnic minorities) that would no doubt score (even) worse on poverty and well-being indicators were discrimination be tolerated under the law

• It, secondly, implies the development of transnational access to national systems of social protection (education, health care, minimum protection). The European Court reasons that all EU burgers residing in another Member State are entitled, in principle, to claim the right to social benefits in this other EU Member State, even if in the past they have never made any financial contributions into that other State’s social security system (f.i. Right to social assistance)

131. EU law (‘Acquis Communautaire’)

B. INTERNAL MARKET LEGISLATION

• Economic integration (=eliminating obstacles to free movement of goods, persons, capital and services) is at the heart of the European Project

• No unanimity required, but qualified majority voting

• This has not always been detrimental to the social. Social role and dimension of ‘negative integration’ may not have been sufficiently appreciated in the past (Social regulation by stealth)

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15Social effects of internal market legislation• Some examples:

- Freedom of goods: Health and Safety regulations (f.i. machinery directive): approximation to the highest level of protection

- Freedom of persons: social security coordination (cf. video) = not merely technical, fills f.i. certain gaps in SS-protection (f.i. discussion about unemployment benefits for unemployed in MS which does not have unemployment insurance for this category

• Finally, let’s not forget that economic integration has led to declining unemployment rates and rising living standards (on an aggregate level). For instance, after EU enlargement in 2004, the new CEE countries saw their unemployment rates drop and their GDP’s rise by an average of nearly 2% a year (with those migrating to work in Western Europe seeing income gains over 100%)

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2. EU ‘New Governance’ or ‘soft law’ (EES / OMC Social Inclusion: cyclical process of monitoring / evaluation aiming to enhance policy learning

Launching(1999)

Common Objectives

Indicators NAPIncl Targets

Joint Report Peer Review

Supported by

PROGRESS

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Is this ‘Soft’ Law ?• Meets a lot of scepticism because of its non-binding nature

• Yet, OMC and EES do impact upon member states’ policies in the field of employment, social inclusion and gender (both procedural and substantive)

• Examples:• improving statistical and monitoring capacity• Governance by objectives (target-setting)• evaluation/comparison/mirror effects• Emerging internal learning processes (f.i. Belgium)• Setting standards for ‘good’ policies and setting concrete targets (f.i. child

poverty in B & F, Income guarantee for older people in B)• Constructing new deliberative spaces in which actors can use

benchmarks, targets, etc. as a ‘leverage’ (f.i. early retirement in B & F)

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3. European Social Dialogue• Possibility to negotiate European collective

agreements, to be implemented in all member states (= negotiated alternative of EU law)

• Although little use has been made of it, there are important directives on

• Parental leave (requires Member States to ensure that employers give a minimum of three months unpaid leave to both mothers and fathers after the birth of a child)

• Part time work (ensures that workers concerned by new forms of flexible working receive comparable treatment to full-time staff on open-ended contracts

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4. Structural Funds (ESF, EFRD, Cohesion Fund)

• The only European instrument for ‘redistribution’ (i.e. genuine European solidarity)

• Budgets have increased substantially during the ’80’s and ‘90’s because of enlargement

• Although Structural Funds have no explicit social goals they have become rather important for social inclusion policy

• For instance, European Social Fund has been established as an employment fund (Rome Treaty 1957), yet over time it has ‘stretched’ the notion of employment: in order to promote ‘employability’ they moved into education (even early childhood or preschool education of marginalized population sections) or areas of social inclusion (pathways into integration) and even health (‘health as a precondition of labour inclusion) F.i. 23% of Belgian ESF money (2007-2013) to ‘improving social inclusion of less-favoured persons’ and 40 % to ‘enhancing access to employment’)

• In the social sphere, Structural Fund Money finances both infrastructure (f.i. hospitals) as well as a myriad of public and private actions

• Structural Funds also play a key role in underpinning the development and revitalisation of Europe’s towns and cities (URBAN)

• “We have all been cheating, in a way” (INT EU3)

• URBAN

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Importance ESF in the field of employment and social inclusion highly underrated

• From 1999 onwards the ESF has been explicitly coupled to the EES and OMC social inclusion

• The availability of ESF-financing for the implementation of EES goals is a key incentive to translate EES goals into action (principle of co-financing)*

• Under the current EU-2020 strategy (see further) allocations for the ESF will increase, yet at the same time conditionalities (ex ante and ex post) will be reinforced

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In sum• Nothwithstanding lack of explicit legislative

competences in the field of social inclusion and social security, the EU has developed a battery of instruments to promote social protection.

• Increasing integration of instruments (f.i. ESF and the EES) gives EU governance in social and employment field a regulatory strength and potential it did not previously possess

• Yet, they should be used to the full…

Europe 2020

Integrated Guidelines

1. Macro-economic surveillance

(Integrated Guidelines 1-3)

2. Thematic coordination

(Integrated Guidelines 4-10)

Monitored through 5 EU

Headline Targets

3. Fiscal

Surveillance

National Reform Programmes

(NRPs)

(including national targets)

Member States - April

Stability and Convergence

Programmes (SCP)

Member States – April

Stability and Growth

Pact

synchronized

What about the social dimension in the new EU 2020-Strategy (‘smart, sustainable and inclusive growth’)?

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24At first sight - social dimension subsumed to financial and economic objectives

- fulfillment of debt criteria is sacrosanct at the moment

- Close link NRPs and Stability and Convergence Programmes

- Synchronisation: NRPs and Stability programme read together (loss of autonomy of social inclusion policy)

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Yet, some positive points

- Adoption of an EU poverty target (lift 20 million people out of the risk of poverty)

- Social cohesion/inclusion: now on equal par with other political priorities (on paper)

- Adoption of national targets in the field of poverty reduction

- Establishment of a European Platform against Poverty (but how will it look like?)

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Risks - One-sided emphasis on fiscal consolidation

might kill growth

- Social initiatives seem to be dominated by fiscal and economic ones : actions promoting social inclusion are not very visible

- New governance infrastructure remains unclear: for instance, to what extent will poverty targets be binding (what if (say) Germany or Bulgary do not set or miss poverty targets?)

27Can Europe’s social dimension be safeguarded?

"The fundamental goal of everything we do is to ensure that the European social market model can be sustained” Danish Prime Minister Helle Thorning-Schmidt (24 feb)

“The European social model has already gone when we see the youth unemployment rates prevailing in some countries.” (European Central Bank President Mario Draghi, 23 feb)”

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Where to go from here?3 scenarios1) Worst-case scenario: further fiscal consolidation and austerity

measures may further erode welfare and social inclusion policies, aggravate the situation of the most vulnerable (if they are not carefully designed to avoid regressive distributive effects) and lead to further social inequality

2) minimum scenario: upgrade existing instruments3) paradigm shift: minimum income as part of ‘Social Investment

Pact’ (Hemerijck, Palier, Vandenbroucke)- Combine short-term fiscal consolidation (f.i. later and more flexible

retirement) and long-term social investment (in human capital) in the context of Europe 2020.

- Objectives: modernise welfare system, invest in people to prepare (capacitate) them for social change and global competition (by emphasizing human capital investments,